(Reuters) - Procter & Gamble Co's (>> The Procter & Gamble Company) quarterly profit soared past expectations as the world's largest household products maker used higher prices and new products to drive sales growth, the strongest indication yet that turnaround efforts are paying off.

The results, along with improved forecasts for the fiscal year, follow months of criticism from analysts and most notably from activist investor William Ackman, who blamed P&G's top brass, led by Chairman and Chief Executive Bob McDonald, for earlier missteps.

Shares of P&G, the maker of Pampers diapers and Gillette razors and a component of the Dow Jones industrial average <.DJI>, jumped as high as $73.25 in morning trading, their highest level in all of McDonald's 3-1/2 years at the helm.

"They've been stuck in the mud for years and this is kind of a ray of hope for the company and they should be commended on the quarter," said Channing Smith, co-manager of the Capital Advisors Growth Fund . P&G represents 2 percent of that fund.

The results, with profit and sales ahead of analysts' expectations, come after months of efforts by P&G to reignite growth in sluggish markets such as the United States while also expanding in emerging markets, where it typically sells lower-priced merchandise.

Back in April 2012, analysts took McDonald to task on a tense conference call after P&G cut its outlook. That summer, Ackman's Pershing Square Capital Management bought the company's shares and began pushing for more change.

Profit has exceeded analysts' expectations every quarter since, helped by new products such as Tide Pods single-dose laundry detergent.

Still, P&G's growth lags that of peers such as Unilever Plc (>> Unilever plc) (>> UNILEVER).

P&G's organic sales, which strip out the impact of divestitures and foreign exchange, grew 3 percent in the latest quarter, while Unilever posted 6.9 percent sales growth on Wednesday.

P&G's rivals such as Unilever, Colgate-Palmolive Co (>> Colgate-Palmolive Company) and Kimberly-Clark Corp (>> Kimberly Clark Corp) have done well in recent years while Procter struggled, and now perhaps it has the firepower to bounce back, said Edward Jones analyst Jack Russo.

"Procter's been left out of the party a little bit, so it's nice to see them reappear here and kind of exert their influence on the group," he said.

P&G has seen U.S. volume growth continue in January, said Chief Financial Officer Jon Moeller. At the same time, it believes it can improve market share in Europe over the next few months with products such as a new Ariel detergent based on the successful U.S. Tide Pods, McDonald said.

Still, analysts would like to see more improvement in other areas. Stifel Nicolaus analyst Mark Astrachan called the results "solid and encouraging," particularly the sales growth, but said P&G continues to lag in categories with strong growth trends, such as beauty.

Meanwhile, rival Kimberly-Clark also posted a better-than-expected profit on Friday.

ANSWERING ACKMAN

P&G has been under pressure to improve performance since Ackman bought a stake of about 1 percent, making his Pershing Square the company's eighth-largest shareholder. Ackman has said many of the company's problems were the fault of top management but said in the fall he understood the board wanted to give McDonald more time to repair years of damage.

"When the company is performing, obviously the pressure from Ackman will probably fade somewhat," said Capital Advisors' Smith, adding that while he does not know Ackman's intentions, it is clear that Ackman's investment in P&G is worth a lot more today than when he bought the shares.

Ackman could not immediately be reached for comment.

Even before Ackman took a stake, P&G was going through a $10 billion restructuring and other changes. It cut 5,500 nonmanufacturing jobs through December, near its goal of reducing 5,700 positions by the end of June, Moeller said on Friday.

Competitors such as Colgate and Kimberly-Clark are also trimming their ranks.

P&G earned $4.06 billion, or $1.39 per share, in the fiscal second quarter ended in December, up from $1.69 billion, or 57 cents per share, a year earlier.

Stripping out unusual items such as restructuring charges and acquisitions, P&G earned $1.22 per share. That topped the company's own forecast of $1.07 to $1.13 per share and analysts' average target of $1.11, according to Thomson Reuters I/B/E/S.

Net sales rose 2 percent to $22.18 billion, topping analysts' forecast of $21.91 billion.

P&G expects fiscal 2013 core earnings of $3.97 to $4.07 per share, up from an earlier forecast of $3.80 to $4. The fiscal year ends in June. Analyst estimates were at the bottom of that new range.

It expects organic sales to rise 3 to 4 percent this year, narrowing a prior forecast of 2 to 4 percent growth.

P&G also said it now plans to repurchase $5 billion to $6 billion in stock after calling for $4 billion to $6 billion in buybacks.

For the current quarter, P&G forecast core earnings per share of 91 to 97 cents, with sales up 3 to 4 percent. Analysts' average forecast was 95 cents per share.

Shares of P&G were up 3.7 percent at $73.00 late on Friday morning, off an earlier high at $73.25.

(Reporting by Jessica Wohl in Chicago; editing by Jeffrey Benkoe, Nick Zieminski and Matthew Lewis)

By Jessica Wohl